Spain sold 4.5 billion euros ($6 billion) of bonds, meeting its maximum target for the auction, and its borrowing costs fell after the European Central Bank lent banks billions of euros to avert a credit crunch.
Spain sold 1.9 billion euros of benchmark three-year bonds maturing in July 2015 to yield 2.617 percent, down from 3.332 percent when the security was last auctioned Feb. 16. A bond maturing in April 2014 was sold to yield 2.069 percent, while a 2016 bond was priced to yield 3.376 percent compared with 4.021 percent on Jan. 19, the Madrid-based Bank of Spain said today.
The Treasury went to the market after the ECB yesterday allocated 529.5 billion euros in long-term loans to 800 banks. ECB lending since December has eased concern about a credit crunch and helped European leaders fight the sovereign debt crisis by boosting demand for government bonds.
EU leaders will discuss how to further work on reassessing the volume of the region’s rescue-fund firewall at a two-day summit starting today in Brussels.
Demand for the benchmark three-year bond was 2.37 times the amount sold, the Treasury said, compared with 2.19 times on Feb. 16. Demand for the April 2014 bond was 2.81 times the amount sold, while the bid-to-cover ratio was 2.59 for the 2016 bond compared with 3.24 on Jan. 19.
Spain’s 10-year bond yield fell 9 basis points after the auction to 4.899 percent. The yield difference over German bunds of the same maturity narrowed 11 basis points to 306 points.
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